(Reuters) – Dallas Federal Reserve Bank President Robert Kaplan said Thursday that he would not feel comfortable allowing inflation to stay at 3% for a year and not raise interest rates, but he does see 2.25% or 2.5% as consistent with the Fed’s new strategy.
“This is not a formula, this is not a commitment,” Kaplan said in a CNBC interview, referring to the Fed’s new strategy statement adopting a goal of 2% inflation, on average, with scope to let it exceed that rate to make up for prior periods of below-2% inflation. “If I think inflation is likely to be muted, I’m willing to take a little bit more risk and have a little bit more tolerance for a modest overshoot.”
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